AGREEMENT made as of January 1, 1997, between
INTERNATIONAL FLAVORS & FRAGRANCES INC. a New York
corporation, (hereinafter called the "Employer") and
Eugene P. Grisanti (hereinafter called the "Employee").
The Employee is now Chairman of the Board of Directors of
the Employer and is employed by the Employer as its President and
chief executive officer under an Agreement between the Employer
and the Employee dated January 1, 1992 (the "Prior Agreement"),
which provides for a fixed term of employment to December 31,
1996. The parties hereto desire to enter into a new agreement
relating to the terms and conditions of continued employment of
the Employee after December 31, 1996 on the basis hereinafter set
forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Employer shall employ the Employee, and the Employee shall
serve the Employer, as President and chief executive officer or in such other
senior capacity to which the Employee may agree, for the period (the "executive
period") which shall commence on January 1, 1997 and which
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may be terminated at any time thereafter, with or without cause, by either the
Employer or the Employee on written notice to the other and shall terminate
December 31, 2001 in any event. During the executive period the Employer shall
employ the Employee as President and chief executive officer or in such other
senior executive capacity to which the Employee may agree, at such salary (at a
rate not less than the rate in effect at the date hereof) and upon such other
terms and conditions as the Board of Directors of the Employer may determine
from time to time, subject to the terms and conditions of this Agreement. In
addition to his salary, the Employee may share, in such proportions as the Board
of Directors or a duly authorized committee of such Board in its sole discretion
shall determine, in any pension, incentive compensation, bonus, stock option,
profit sharing, group insurance, disability or other employee benefit plans,
programs, or policies, whether of general or limited application, now in effect
or hereafter adopted for the Employer. In the event that the Employer shall
terminate the executive period prior to December 31, 2001, the compensation of
the Employee shall continue for a period of twelve (12) months after such
termination (but ending not later than December 31, 2001) at the rate in effect
prior to such termination.
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2. After termination of the executive period, the Employee shall
serve the Employer and its subsidiaries for a period of ten (10) years in such
consulting capacity as the Employer may reasonably request, in order that the
Employer may continue to have the benefit of the Employee's experience. The
length of the consulting period shall not be affected by any disability of
the Employee. During the consultation period the Employee shall be free to
devote the greater part of his time to other pursuits. For his services as a
consultant, the Employer shall pay the Employee an annual fee, in equal monthly
installments, of One Hundred Fifty Thousand Dollars ($150,000).
3. During the executive period, the Employee shall devote to the
performance of his duties hereunder substantially his full time subject to
reasonable vacations.
4. During the consultation period, the Employee shall not engage
directly or indirectly in any business which is competitive to that of the
Employer and its subsidiaries, but this shall not prevent the Employee from
owning a beneficial interest in less than five percent (5%)
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of the outstanding capital stock of any publicly owned competitive company.
5. (a) The Employer hereby grants to the Employee as of January 1,
1997, a stock award of 250,000 shares of Common Stock of the Employer (the
"Award") of the par value of twelve and one half cents ($.12 1/2) per share,
subject to a period of restriction as provided below (the "Restriction Period")
and subject to the attainment of a performance goal ("Performance Goal") as
provided below. The Restriction Period with respect to the Award shall commence
on the date hereof and shall terminate in five installments as hereinafter
provided. Shares awarded hereunder shall be made available from shares
reacquired by the Company, including shares purchased in the open market.
(b) The Employee shall be issued one or more certificates for
the shares of Common Stock of the Employer awarded under this Agreement
subject to the terms and conditions hereinafter provided ("Restricted
Stock"). Such certificate or certificates shall be registered in the name
of the Employee, and shall bear an appropriate legend referring to the
terms, conditions and restrictions
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applicable to such substantially in the following form:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeitures) of an agreement entered into
between the registered owner and International
Flavors & Fragrances Inc. Copies of such
agreement are on file in the offices of
International Flavors & Fragrances Inc., 521
West 57th Street, New York, New York 10019."
Such certificate or certificates shall also be subject to such stop-transfer
orders and other restrictions as the Employer may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is
then listed and any applicable federal or state securities law, and the
Employer may cause an appropriate additional legend or legends to be put
on any such certificates to make reference to any such restrictions.
(c) The Employer may cause the stock certificates evidencing such
shares to be held in custody by a bank or other institution, or the
Employer may itself hold such shares in its custody until the restrictions
thereon
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shall have lapsed and may require that the Employee shall deliver a stock power
or powers endorsed in blank relating to the stock covered by the Award.
(d) Except as required by law, the Employee is not required
to make any payment or provide consideration for the Award other than the
rendering of future services to the Employer.
(e) The shares of Common Stock awarded pursuant to this
Agreement shall be subject to the following restrictions and
conditions:
(i) The Restriction Period shall extend from the date hereof,
January 1, 1997, to February 28, 1998 with respect to one fifth of the
shares covered by the award, to February 28, 1999 with respect to one
fifth of such shares, to February 28, 2000 with respect to one fifth of
such shares, to February 28, 2001 with respect to one fifth of such
shares, and to February 28, 2002 with respect to the remaining one fifth
of such shares. During the Restriction Period with respect to each such
installment of such shares covered by the Award, the Employee shall not
be permitted to sell, transfer,
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pledge or assign any of the Restricted Stock included in such installment.
(ii) In addition to the provisions of Section 5(e)(i), each
installment of the Award is subject to the attainment of a Performance
Goal for that installment either as provided in Section 5(e)(ii)(A) or
in Section 5(e)(ii)(B) below, in either case the attainment of such
goal to be certified in writing by the Stock Option and Compensation
Committee (the "Committee"). If a Performance Goal for any
Installment Period is not attained as hereinafter provided, that
installment of the Award shall be forfeited. The performance goals set
forth in (A) and (B) below are alternate performance goals, i.e., the
requirement is satisfied if the Performance Goal as set forth in
either A or B is met.
(A) This Performance Goal for each
installment shall be attained if 1% of the
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Employer's Net Income for the applicable
Installment Period exceeds the Fair Market Value
of the installment.
If a Performance Goal is not attained for an
Installment Period under either this Section or
under Section 5(e)(ii)B, the shares awarded with
respect to that Installment Period shall remain
held in custody as provided in Section 5(c) until
the end of a succeeding Installment Period, and
this Performance Goal for the former Installment
Period or Periods as well as for the latter
Installment Period shall be attained if 1% of the
average of the Net Incomes for such Installment
Periods exceeds the Fair Market Value of any one
installment. Notwithstanding the foregoing, this
Performance Goal for any Installment Period shall
be attained if 1% of the average of the Net
Incomes with respect to the combined first
Installment Period and all subsequent Installment
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Periods exceeds the Fair Market Value of any one
installment.
"Fair Market Value" of a share of Common
Stock means the mean between the highest and the
lowest sales prices thereof on the date of grant,
as reported in The Wall Street Journal, New York
Stock Exchange Transactions--Composite
Transactions, or as reported in any successor
quotation system adopted prospectively for this
purpose by the Committee.
"Installment Period" means the Restriction
Period with respect to each installment of the
Award as provided in Section 5(e)(ii).
"Net Income" means the amount reported by the
Employer as consolidated income (after taxes)
before extraordinary items and the cumulative
effect of accounting changes, adjusted, however,
by adding any amount which has been expensed
(after taxes) for the Award under this Agreement
in computing such Net Income, all as determined in
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accordance with generally accepted accounting
principles and as appearing in the Employer's
consolidated financial statements for the year as
audited by the Employer's independent accountants.
(B) This Performance Goal for each
installment shall be attained if the Employer's
return on equity ("Return on Equity") for the
applicable Installment Period was equal to or
greater than 15%.
If a Performance Goal is not attained for an
Installment Period under either this Section or
under Section 5(e)(ii)(A), the shares awarded with
respect to that Installment Period shall remain
held in custody as provided in Section 5(c) until
the end of a succeeding Installment Period, and
this Performance Goal for the former Installment
Period shall be attained if the Employer's Return
on Equity for the combined former and any later
Installment Period or Periods was equal to or
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greater than 15%. Notwithstanding the foregoing,
this Performance Goal for any Installment Period
shall be attained if the Employer's Average Return
on Equity including the first Installment Period
and all subsequent Installment Periods was equal
to or greater than 15%. For this purpose, Average
Return on Equity shall be determined by dividing
the average of the Net Incomes for such
installment periods by the Average Total
Shareholder Equity for such periods.
"Average Total Shareholder Equity" for any
period means the arithmetic average of the amounts
of Total Shareholder Equity as at the beginning
and the end of such period.
"Installment Period" means the Restriction
Period with respect to each installment of the
Award as provided in Section 5(e)(i).
"Net Income" has the same definition as in
Section 5(e)(ii)(A) above.
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"Return on Equity" means the amount obtained
by dividing Net Income by the Average Total
Shareholder Equity.
"Total Shareholder Equity" means the amount
reported in the consolidated balance sheet by the
Employer as total shareholder equity, determined
in accordance with generally accepted accounting
principles and as appearing in the Employer's
Annual Report for the year, adjusted for the
extraordinary or non-recurring items described
with respect to Net Income, and any amount which
has been expensed (after tax) for the award under
this Agreement in computing such Net Income.
(iii) Except as provided in Section 5(e)(i), the Employee shall
have with respect to the Restricted Stock all of the rights of a
stockholder of the Company, including the right to vote the shares and
receive dividends and other distributions, provided that
distributions in the form of stock shall be subject to the same
restrictions as the underlying Restricted Stock. Certificates for shares of
each installment of
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Restricted Stock shall be delivered to the Employee promptly after, and
only after, the Restriction Period for such shares shall expire and the
Performance Goal shall have been attained without any forfeiture having
occurred with respect to such shares.
(iv) In the event of either the death of the Employee or a termination
of his employment by either the Employer or Employee as a result of
disability of the Employee on a date (the "early termination date") prior
to December 31, 2001, all restrictions on the Award shall thereupon
terminate and the Award shall no longer be subject to the attainment of any
Performance Goal with respect to that number of shares of the Restricted
Stock which, together with the number of shares of Restricted Stock the
restrictions on which shall have lapsed prior to the early termination
date, shall bear the same proportion to the total number of shares of
Restricted Stock 250,000 as the number of full months which shall have
elapsed from the date of this agreement to the early termination date shall
bear to the total number of months (60) of the executive period.
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(v) Upon termination of employment of the Employee for any reason
during the Restriction Period or before the applicable Performance Goals
are satisfied, subject to the provisions of Section 5 (e)(iv), or in the
event that the Employee fails promptly to pay or make satisfactory
arrangements as to the withholding taxes as provided in Section 5 (f), all
shares still subject to restriction shall be forfeited by the Employee and
will be deemed to be reacquired by the Employer.
(vi) The Employee may, at any time prior to the expiration of the
Restriction Period, waive all rights with respect to all or some of the
shares of Restricted Stock by delivering to the Employer a written notice
of such waiver.
(vii) Any attempt to dispose of Restricted Stock in a manner contrary
to the restrictions shall be ineffective.
(viii) Upon any "change in control" of the Employer, as that term is
defined in Section 1 of the Executive Severance Agreement between the
Employer and
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the Employee dated as of February 16, 1989 ("ESA"), all restrictions in
effect with respect to the any remaining installments of the Award shall
thereupon lapse and have no further force or effect, and the Award shall no
longer be subject to the attainment of any Performance Goal.
f) The Employee shall, no later than the latter of the date as
of which the restrictions would otherwise lapse or the Performance Goal is
attained with respect to any installment of Restricted Stock referred to
in Section 5 (e), or at any earlier date, as determined by the Employer,
on which the Employee is subject to a tax as a result of the Award, pay
to the Employer, or make arrangements satisfactory to the Employer,
regarding payment of any Federal, state or local taxes of any kind
required by law to be withheld with respect to the stock subject to such
Award, and the Employer and its subsidiaries shall, to the extent permitted by
law, have the right to deduct such amount from any payment of any kind
otherwise due to the Employee.
g) In the event that the outstanding shares of Common Stock shall
be changed into or exchanged for a
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different number or kind of shares of stock, securities or property of the
Employer or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock dividend, split-up, combination of
shares, or otherwise), there shall be substituted for each share of Common Stock
then subject to the Award the number and kind of shares of stock, securities or
property into which such outstanding shares of Common Stock shall be so changed
or for which such shares shall be so exchanged. The Board of Directors of the
Employer, in the event of any such change or exchange, shall have the power and
authority to make any equitable adjustments with respect to the Award as it
deems necessary or advisable to enable the Employee to receive the full intended
benefit of the Award. In the event of any such change or exchange, any stock,
securities or other property which the employee is entitled to receive by reason
of his ownership of shares of Restricted Stock shall also be subject to the same
restrictions and performance goals as such Restricted Stock, and shall bear an
appropriate legend.
h) Neither this Section 5 nor any action taken thereunder shall be
construed as giving the Employee any right to be retained in the employ of the
Employer or
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any of its subsidiaries or as qualifying in any way the right of the Employer or
the Employee to terminate the employment of the Employee at any time, with or
without cause, as provided in Section 1 of this Agreement.
i) Income realized as a result of an Award of Restricted
Stock shall not be included in the Employee's compensation for the purpose
of the ESA or any benefit plan in which the Employee may be enrolled or for
which the Employee may become eligible unless otherwise specifically
provided for in such plan.
6. All notices hereunder shall be in writing and delivered or
mailed by registered mail, return receipt requested, to the following
addresses: to the Employer at its office at 521 West 57th Street, New
York, N.Y. 10019, and to the Employee at 118 Delafield Island Road,
Darien, Connecticut 06820, or to such other address as the Employer
or Employee may hereafter designate in writing for the purpose.
7. This Agreement shall not be assignable by the Employer
without the written consent of the Employee, except that if the Employer
shall merge or consolidate with or
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into, or transfer substantially all of its assets, including good will, to
another corporation or other form of business organization, this Agreement shall
bind and run to the benefit of the successor of the Employer resulting from such
merger, consolidation or transfer. Neither the Employee nor any person
designated by him may assign, pledge or encumber his or her interest in this
Agreement or any part hereof without the Employer's written consent, this
agreement being personal to the Employee and the beneficiaries designated by
him.
8. This Agreement supercedes the Prior Agreement, which shall
have no further force or effect with respect to the employment of the
Employee by the Employer as an executive or with respect to his services and
compensation as a consultant, after the date of this Agreement.
9. This Agreement may not be modified except by a writing signed
by both parties hereto. This Agreement shall be construed under and be
governed by the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have hereto
and to a duplicate counterpart hereof set their signatures
as of the day and year first above written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By: __________________________________
THOMAS H. HOPPEL
Vice President and
Chief Financial Officer
Attest:
_________________________________
STEPHEN A. BLOCK,
Vice President and Secretary
____________________________________
EUGENE P. GRISANTI
[SEAL]
EPGAGMT3
AGMT
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